Avoiding the pitfalls of social engineering in the Middle East

Governments should gauge citizens’ attitudes and perceptions through surveys and interviews throughout the economic reform process.

Sunday 28/01/2018

Saudi Aramco's Natural Gas Liquids plant and oil production in the surrounding Shaybah field, which is part of the kingdom's Vision 2030. (AFP)

JERUSALEM - Who is drawing the economic blueprint for the Middle East? The answer, at least in part, lies within the Gulf offices of global management consulting firms.

Political leaders and bureaucrats from Saudi Arabia to the United Arab Emirates and beyond have turned to management consulting firms to help reform their energy sectors, restructure banking and financial policy and modernise labour market practices.

Lebanon, for example, announced it would work with McKinsey & Company to restructure its economy and reduce the country’s reliance on remittances.

Consultant-led reform packages can prove attractive for political leaders in the Middle East, where government jobs comprise a sizeable percentage of the local labour market. Governments in the region desire to reduce bloated state bureaucracies and boost private sector growth. An external push is sometimes needed, though, to help leaders muster the political will and local legitimacy to make sweeping economic reforms.

McKinsey is providing that push. Perhaps the most ambitious and deeply reported McKinsey-led reform package is Saudi 2030, a plan to modernise Saudi Arabia’s economy and reduce its reliance on oil. The plan includes greater integration of women and young Saudis into the workforce and encourages structural changes in the labour market that will reduce government jobs and encourage transition to the private sector.

Saudi 2030 is a recognition by Saudi leaders, particularly Crown Prince Mohammed bin Salman bin Abdulaziz, that oil revenue will play a smaller role in the economy in the future. This shift — from oil-funded patronage and bloated bureaucracies to private sector development and subsidy cuts — will inherently alter Saudi Arabia’s social contract. In that sense, Saudi 2030 is not merely an economic reform package but a social engineering project that may be outside the expertise of even the most experienced management consultants.

Calvert W. Jones, an assistant professor of political science at the University of Maryland, touched on this issue in a recent opinion article in the Washington Post. Jones compared reform efforts in Saudi Arabia to previous McKinsey-led efforts in the UAE, concluding that “social engineering is better at changing civic attitudes than economic ones.”

Jones said the UAE reform package, which focused on creating “globalisation-ready” citizens, failed to change citizens’ expectations about government work.

“[W]hile students were socially ‘ready’ for globalisation in their leaders’ eyes, they were not more inclined to think beyond government jobs and compete in the private sector,” she said.” In fact, Jones said, students surveyed had grown even more supportive of a citizen’s right to a government job and less interested in entrepreneurship.

Although Saudi Arabia and the UAE have important differences, their labour market challenges and prevailing economic attitudes are similar and comparable across the region. A quick analysis of these factors offers important tips for management consultants seeking to avoid the pitfalls of social engineering in Saudi Arabia and the region.

First, don’t underestimate the durability of economic mindsets. “The aspiration of many citizens to obtain government jobs is understandable due to prevailing conceptions of the social contract but it is also an obstacle to the kind of development envisioned in Saudi 2030,” Jones said. In that sense, adjusting labour market conditions involves patience on the part of political leadership and flexibility on the part of citizens.

Patience and flexibility lead to the second tip: Stay the course. It will prove tempting to divert funding and resources from long-term economic projects to fund shorter-term political or security priorities. Saudi Arabia, for example, might be tempted to reduce investments in education or job-training programmes to purchase advanced military hardware or fund regional security programmes. A country seeking to make the long-term economic change should put its money where its mouth is — and keep it there.

Third, give citizens a stake in their economic transformation. Rather than provide space for political participation, Middle East governments typically rely on nationalistic praise to motivate citizens. As Jones explained, nationalistic praise may increase citizens’ willingness to volunteer for the good of the community but it is unlikely to encourage economic change aligned with globalisation and private sector development.

Instead, governments should gauge citizens’ attitudes and perceptions through surveys and interviews throughout the economic reform process. “Just as citizens will have to broaden their horizons beyond government jobs, bureaucrats and consulting firms will need to work to understand citizens’ perspectives and allow them more of a voice in the reform process,” Jones explained.

Finally, widen the circle. Consulting firms can offer unique, transformative approaches to economic reform in the Middle East but meaningful social change requires looking beyond the economic sphere. Political scientists, historians and local civil society organisations should all play a role in guiding a country’s social transformation.

Ultimately, it is inclusivity that will help governments and consulting firms avoid the pitfalls of social engineering in the Middle East.